Detroit Auto. Inter-Insurance Exchange v. Gavin

• Decision Date: 23 December 1982
• Docket Number: Nos. 1,A,INTER-INSURANCE,Docket Nos. 62043,2,64862,s. 1
• Citation: 331 N.W.2d 418,416 Mich. 407
• Parties: DETROIT AUTOMOBILEEXCHANGE, Plaintiff-Appellant, v. Nancy M. GAVIN, Defendant-Appellee. DETROIT AUTOMOBILEEXCHANGE, Plaintiff-Appellant, v. Kathleen STANDFEST, Defendant-Appellee. pril Term 1981. Calendar
• Court: Michigan Supreme Court

Page 418

331 N.W.2d 418

416 Mich. 407

DETROIT AUTOMOBILE INTER-INSURANCE EXCHANGE, Plaintiff-Appellant, v. Nancy M. GAVIN, Defendant-Appellee.

DETROIT AUTOMOBILE INTER-INSURANCE EXCHANGE, Plaintiff-Appellant, v. Kathleen STANDFEST, Defendant-Appellee.

Docket Nos. 62043, 64862, April Term 1981.

Calendar Nos. 1, 2.

Supreme Court of Michigan.

Argued April 7, 1981.

Decided Dec. 23, 1982.

Dickinson, Pike, Mourad, Brandt & Hanlon by Ronald R. Hanlon, Detroit, for plaintiff-appellant; Gromek, Bendure & Thomas by Carl L. Gromer, James G. Gross, Detroit, of counsel.

Moore, Sills, Poling, Wooster & Sinn, P.C. by Richard B. Poling, Jr., Birmingham, for defendant-appellee in No. 62043.

Lopatin, Miller, Freedman, Bluestone, Erlich & Rosen by Sheldon L. Miller, Detroit, for defendant-appellee in No. 64862.

RYAN, Justice.

In this dispute between defendants and their automobile insurance company over the liability limits for uninsured motorist coverage, we are called upon to determine the extent to which the decision of private automobile insurance contract arbitrators is judicially reviewable.

Plaintiff has challenged the validity of two separate and unrelated arbitration awards, each in excess of $20,000, the policy limits of the contracts of insurance in each of the cases.

By our orders of October 10, 1980, ¹ we consolidated these cases and granted leave to appeal, directing the parties to brief the question:

"[Whether] the Court of Appeals clearly err[ed] in concluding that the arbitrators were authorized by the insurance contract[s] to ignore the language of [the] contract[s] precluding the insured from 'stacking' insurance policies." ² We have concluded that the Court of Appeals erred in both cases.

I

On October 27, 1975, while driving her automobile, Nancy Gavin was involved in an accident with an uninsured motorist. She was severely injured. Ms. Gavin was the named insured under a policy of insurance covering her vehicle and written by the Detroit Automobile Inter-Insurance Exchange. The liability limit for uninsured motorist coverage under the policy was the standard $20,000 per individual.

At the time of the accident, Ms. Gavin's father was the named insured in three other policies issued by DAIIE covering three vehicles which he owned, each containing the standard $20,000 limit of liability for uninsured motorist protection. Ms. Gavin was a member of her father's household.

On June 15, 1976, defendant Gavin filed for arbitration with the American Arbitration Association under the terms of the four insurance policies, seeking recovery for her injuries under all four of the policies.

Thereafter, DAIIE, maintaining that the insurance policy benefits could not be "stacked" after October 1, 1973, filed an action for declaratory judgment in the Wayne Circuit Court, seeking resolution of the question whether defendant Gavin was entitled to "stack" the four policies. The circuit court granted summary judgment in defendant's favor on the ground that the stacking issue was an arbitrable question under the policies and remanded the matter to arbitration.

On May 23, 1977, the dispute was heard before a panel of arbitrators. The issues of damages and the stacking of uninsured motorist coverage were considered. Ms. Gavin took the position that she was entitled to a maximum of $80,000 in uninsured motorist benefits, the sum total of the limits of the four policies. DAIIE claimed that coverages could not be stacked and that the maximum amount available to Ms. Gavin was $20,000 under the terms of the insurance policy applicable to the car she was driving at the time of the accident.

On July 29, 1977, the arbitrators rendered an award of $39,000. Notice of the award was sent to the parties on August 2, 1977, and received on or about August 3, 1977. On August 24, 1977, the attorney for Ms. Gavin advised DAIIE that 20 days had passed subsequent to the receipt of the notice of award. Two days later, on August 26, 1977, DAIIE filed a delayed motion to vacate the award on the basis that the arbitrators had "exceeded their powers". GCR 1963, 769.9(1)(c). Defendant Gavin responded by filing an answer and brief in opposition as well as her own motion to confirm the award.

On October 14, 1977, the circuit court entered an order denying DAIIE's delayed motion to vacate the award and entered a judgment confirming the $39,000 award with interest and costs. DAIIE satisfied the judgment to the extent of $20,000 and appealed to the Court of Appeals. On August 24, 1978, the Court of Appeals affirmed the circuit court on the ground that once substantive arbitrability is determined judicial review of arbitration effectively ceases, and on the ground that DAIIE's motion to vacate the arbitration award was not timely filed. It is from that determination that DAIIE appeals to this Court.

On March 28, 1977, while driving a 1975 Ford pickup truck, defendant Kathleen Standfest was involved in an accident caused by an uninsured motorist. The truck being driven by defendant was insured by plaintiff DAIIE and defendant was a named insured under the policy. At the time of the accident, she also owned a 1975 Toyota automobile insured by plaintiff.

Defendant filed for arbitration with the American Arbitration Association. She sought recovery under both policies of insurance issued by plaintiff. It was her position that the policies, containing uninsured motorist coverage, could be stacked. It was the position of the Detroit Automobile Inter-Insurance Exchange that coverages could not be stacked or pyramided after October 1, 1973, and that the maximum amount available to her was $20,000.

On April 6, 1978, the arbitrators rendered an award of $35,000. Notice of the award was received by DAIIE on April 10, 1978, and on April 21, 1978, it filed a motion to vacate the arbitration award in the Wayne Circuit Court. On August 16, 1978, an order was issued denying plaintiff's motion to vacate the award, confirming the award, and entering judgment in the amount of $35,000. Plaintiff partially satisfied the judgment by paying to defendant the sum of $20,000, the policy limits of the uninsured motorist provision of the insurance contract on the 1975 Ford pickup truck.

Plaintiff filed a timely claim of appeal to the Court of Appeals. On March 5, 1980, the Court of Appeals issued a published per curiam opinion affirming the trial court reasoning that because it was "unclear" at the time of the award whether the arbitrators had the power to stack the insurance policies, their decision to exercise such power was unreviewable. From that decision DAIIE sought and was granted leave to appeal to this Court.

II

All of the policies involved in both the cases before us contain what have popularly come to be known as antistacking clauses. DAIIE claims that the plain language of these provisions prohibits insureds from recovering in excess of the policy limits of one applicable policy.

The first of the provisions upon which the plaintiff relies is the so-called "owned vehicle exclusion" which appears in each of the policies and provides:

"The insurance afforded by this coverage does not apply:

"(1) to bodily injury to an insured sustained while occupying any automobile, other than an owned automobile, except a non-owned automobile to which there is applicable and available to such insured no insurance similar to that afforded by this coverage."

The "definitions" section of the policy define owned and non-owned automobiles as

"(d) 'owned automobile' means the vehicle described in the declaration certificate and, as defined herein, a temporary substitute automobile, a replacement automobile, and a trailer owned by the insured;

* * *

* * *

"(i) 'non-owned automobile' means any automobile or trailer, other than a temporary substitute automobile, not owned by, furnished or available for the frequent or regular use of the named insured, relative or other resident of the same household of such named insured, however, an automobile or trailer rented or leased by the named insured or relative for a continuous period of 30 days or less shall not be deemed to be furnished or available for frequent or regular use."

The second provision upon which DAIIE relies as limiting its liability to $20,000 in each case is the "other insurance" provision:

"6. Other Insurance

"With respect to bodily injury to an insured sustained while occupying an automobile or through being struck by an uninsured automobile, if such insured is a named insured under other similar insurance available to him, then the damages shall be deemed not to exceed the higher of the applicable limits of liability of this insurance and such other insurance, and the exchange shall not be liable under this coverage for a greater proportion of the applicable limit of liability of this coverage than such limit bears to the sum of the applicable limits of liability of this insurance and such other insurance.

"Subject to the foregoing paragraph, if the insured has other similar insurance available to him against a loss covered by this coverage, the exchange shall not be liable under this coverage for a greater proportion of such loss than the applicable limit of liability hereunder bears to the total applicable limits of liability of all valid and collectible insurance against such loss."

In addition to these provisions the policies each contain an agreement for arbitration of any dispute related to the uninsured motorist coverage:

"In the event of disagreement and upon the written demand of either, the matter or matters upon which the insured and exchange do not agree shall be settled by arbitration in accordance with the rules of the American Arbitration Association and judgment upon the award rendered by the arbitrators may be entered in any court having jurisdiction thereof. The insured and the exchange each agrees to consider itself bound and to be bound by any award made by the arbitrators...